Journal
INFORMS JOURNAL ON COMPUTING
Volume 23, Issue 3, Pages 470-482Publisher
INFORMS
DOI: 10.1287/ijoc.1100.0414
Keywords
reliable facility location problem; uncertainty; heuristics; approximation algorithm
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Funding
- National Science Foundation [CMMI-0621433, CMMI-0727640]
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We study a reliable facility location problem wherein some facilities are subject to failure from time to time. If a facility fails, customers originally assigned to it have to be reassigned to other (operational) facilities. We formulate this problem as a two-stage stochastic program and then as a nonlinear integer program. Several heuristics that can produce near-optimal solutions are proposed for this NP-hard problem. For the special case where the probability that a facility fails is a constant (independent of the facility), we provide an approximation algorithm with a worst-case bound of 4. The effectiveness of our heuristics is tested by extensive computational studies, which also lead to some managerial insights.
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